Thursday, December 31, 2015

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

This is the seventh time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :)

Jan 2016

Global oil price took a dive to below $40. The avg price for Tapis crude oil for Dec is ~$42 as stockpiles and crude inventories continue rise. Also oversupply issue will be exacerbated by Iranian oil coming to market soon in 2016. Another potential news can be attributed to the successful climate talks in Paris in December. It is said that the breakthrough deal marks the beginning of the end of the fossil fuel age.

MYR's performance was uneventful; trading sideways for the entire month between 4.25 to 4.30. Even as the US Fed raised the benchmark rate by a quarter of a percentage point to between 0.25 percent and 0.50 percent, MYR was not really shaken as the long anticipated hike's impact has already been priced in by investors and currency traders.

Malaysia still suffers from a crisis of confidence and political uncertainty (now with UMNO's incoming annual general meeting, also Budget 2016 has not reveal any catalyst to bring MYR back to less than 4 to the Dollar. Even Moody's has the same thought: Moody's Says Budget 2016 'Tame'.

Domestically we received a "Kerja Bodoh" budget that is delivering so little with every corner being cut. I've talked about this in my previous post: Budget 2016: Ini Kerja Bodoh. Other than that I don't see anything interesting until the end of the year when global markets are usually more quiet during the festive season (Thanksgiving and Christmas).

Some asked why the price of crude oil has dropped in 2015?

- Strong US dollar; all commodities are priced in dollar and that includes oil.

- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.

- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.

- Declining demand; world's no.2 economy China is slowing.

- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.- Successful Paris climate change breakthrough talks; marks the beginning of the end of the fossil fuel age.

How come our pump fuel price did not drastically drop in 2015?

- This is primarily due to weakening MYR to the USD.

RM/L has dropped a lot from 1.77 (Nov) to 1.50 (Dec). With such a drastic drop there is no doubt that I will predict that fuel price will drop by 15 sen or 20sen. There is no need to rush to the petrol station, please wait until after the announcement tomorrow and fill your tank on 1st January (Friday).

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 47.25 (I have already exceeded RM 42 and should hit RM50)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

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About Me

The moniker "aboi" (young chap) is what others call me. An electronics engineer by profession. Studied E&E at a local university college. I spend my free time studying, playing video games, reading and occasionally work. I also love running and would want to run an ultra marathon one day. I can be reached at the following email: nick_allianz@hotmail.com

Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision. You can always place your comments here or email me privately at nick_allianz@hotmail.com